Can you Reduce Your Working Hours Without Impacting Your Pension Under RREGOP?

It is important to take the time to think about it carefully. You do not need to stop working completely overnight! There are various measures that allow you to reduce your working hours without impacting the amount of your retirement pension, even if your salary is reduced. This means that you could continue working at a different pace and increase your pension.

The measures offered vary depending on your working conditions and may be named differently in various workplaces. The important thing is to be well informed before entering into an agreement with your employer.

Certain measures can be offered throughout your career, such as reduction or time management arrangements and sabbatical leaves with deferred pay. Other measures are only offered at the end of your career, such as phased departure.

Reduction or time management arrangements

With a reduction or time management arrangement, you can reduce your working hours or spread them over a number of days that differs from a normal work week. Certain agencies offer "reduced workweek" options. For example, working four days and having one day off per week. Another option allows you to accrue compensatory leave, such as working 35 hours but being paid 32 hours in order to accrue more days off.

How does it work with your pension plan? During the agreement, your contributions are calculated based on the salary you would have received without the agreement. In addition, your years of service and salary are recognized for the calculation of your pension as if you had not entered into this agreement. Therefore, even if you work less and your employment earnings are lower, reducing or adjusting your working hours will not impact the amount of your pension.

Sabbatical leave with deferred pay

The sabbatical leave with deferred pay can be an attractive option at the end of your career if you feel the need to take a break rather than retire. In this case, you can reduce your salary for a period from 2 to 5 years in order to take between 6 and 12 consecutive months of leave. In the case of a leave to study, the duration of the agreement can be one year, and the leave can be for three consecutive months. It is important to note that the agreement requires you to return to work for at least the duration of your leave.

For example, you could receive 80% of your salary over five years and be on leave during one of those five years. However, you could not take your year of leave during the last year of the agreement and then retire.

What happens with your pension plan if you go on leave? For the duration of the agreement, your contributions are calculated based on the salary you actually receive. However, your years of service and salary are fully recognized for the calculation of your pension, as if you had not entered into this agreement.

Phased departure

When you are approaching retirement, you can request a phased retirement. This is an agreement that allows you to reduce your working hours in the years leading up to your retirement. You and your employer then agree on your new work schedule. This schedule can vary during the agreement, as long as you work at least 40% of the full-time schedule for the same position for the total duration of the agreement.

For example, a person could work an 80% schedule in the first year, a 60% schedule in the second year, and a 40% schedule in the final year of his or her agreement, or a teacher at a CEGEP could work a 100% schedule during one semester and a 0% schedule during the other semester. He or she would still meet the minimum requirement of 40% for the duration of the agreement.

The duration of this type of agreement must be between one and five years, and you must be entitled to a reduced or unreduced pension at the end. You can extend the agreement beyond the five-year period if your working conditions allow it and your employer agrees, however, this would be for a maximum of seven years. Contrary to a reduction or time management arrangement, which must be renewed regularly, your phased departure agreement cannot be cancelled by your employer after it has been signed.

During the agreement, your contributions to RREGOP are calculated based on the salary you would have received without the agreement. The same applies to your years of service and salary, which are recognized for the calculation of your pension as if you had not entered into the agreement.

Gradual retirement at age 65

It is a measure available to persons aged 65 or over until 30 December of the year in which they turn age 71. Gradual retirement allows you to reduce your working hours while receiving your pension under RREGOP. You could also hold another position covered by a public-sector pension plan while receiving your pension under RREGOP. However, generally, the total of the salary and pension you receive cannot exceed the salary you would have received had you not reduced your work schedule. Should you exceed it, your pension will be reduced accordingly for the duration of your gradual retirement.

Gradual retirement is a good option for persons who want to retain their employment ties in order to maintain their working conditions, for example when they need to choose their work schedules or vacation periods. Gradual retirement can also be used as a means of returning to work when a person turns age 65. However, it is likely more financially advantageous for a member of RREGOP to return to work rather than choose gradual retirement.

Since gradual retirement consists in receiving your pension under RREGOP while working, you will no longer contribute to the plan and accrue service.

Preparing well for retirement

As you can see, there are several ways to make a smooth transition toward retirement. Take the time to think it through carefully, and remember that it is important to prepare yourself psychologically as well!

Keep in mind that once you retire, if you ever decide to return to work, it will not impact your pension. It will remain the same, and you will not start contributing to RREGOP again. This is good to know!